As we feared, the compromise may have been compromised by the uncompromising power of AT&T lobbyists. Once again, we learn that they struck at the last hour and may have put local schools and libraries on the chopping block.

Update: The Assembly will now be meeting at 1:00 rather than this morning. Rumors abound that they are still discussing how to "compromise" on AT&T's attack on the schools and libraries.

Unfortunately, this afternoon, I'll be leaving for a short camping trip (AT&T is not going to ruin my trip) and I have some canned posts queued up, so I won't be able to cover what happens in Wisconsin immediately. For news on the stimulus grant impact, follow WI_Broadband and for news about WiscNet, follow ijohnpederson and his live blog.

The word from Wisconsin is mostly good. A deal has been struck that will spare WiscNet, though it will be studied for two years and then could be killed. But a fair, open study will allow WiscNet to clearly demonstrate its value -- WiscNet thrives in the light while AT&T thrives at secretive, last minute measures to gut its competitors.

Additionally, the stimulus grants appear to be safe. The Legislature apparently will not require them to be returned long after the recipients had begun implementing them. But again, there is some bad news in that UW Extension will be restricted from receiving federal grants in the future to build the networks otherwise unavailable to schools and libraries. So that is disappointing. Returning those funds would have cost a few communities $27.7 million over just 5 years.

However, nothing is settled until the Legislature fully votes on it (today and Thursday) and the Governor signs the bill. AT&T lobbyists don't get paid to create fair compromises and surely aren't finished scheming. So make sure you have made your thoughts on this matter known to your elected officials. The Rootstrikes make it easy. Don't forget to tell the Governor too -- the line-item veto is a powerful tool.

Some more details have emerged regarding the damage to local budgets that would occur if the Leg requires the stimulus awards to be returned, in the Superior schools, for instance:

"We would pay about five times more for the internet access than we already pay through Wiscnet," said Nordgren [Associate Vice Chancellor of UW Superior].

The Superior School District said they would also lose money, because they have already invested $300,000 in anticipation of the project.

"We utilized the funding from this broadband grant in order to purchase and update our website that was archaic," said Janna Stevens, Superintendent at the Superior School District.

Finally, we strongly oppose JFC’s decisions to dismantle WisNet and to reject $37 million in federal dollars for promoting broadband service in rural Wisconsin. Many libraries and city halls around the state save taxpayers’ dollars by using WisNet as their Internet provider. This change benefits private Internet service providers at an additional cost to taxpayers. At a time when both the Administration and the Legislature are preaching government frugality, it doesn’t make sense to take away some of the very tools local governments use to reduce spending. We urge the Legislature to reverse these JFC amendments.

If there is one lesson we can take away from this fight, it is the need to build strong networks that can quickly respond to the tricks companies like AT&T can do in their power-center: state capitals and DC. This provision was obviously intended to benefit AT&T and a few other companies at the expense of all Wisconsin, particularly its schools and libraries. But WiscNet and defenders responded quickly and powerfully to the attack. And when they did respond, they did so with various arguments, including the cost to libraries and schools. If you can't tell a legislator how it impacts a budget somewhere, you probably aren't being heard.

The city of Powell started talking about a fiber network in 1996 but did not make progress for almost ten years. They developed a plan to build a FTTH network and lease it to an outside operator. The incumbents declined to partner with the City and later spent considerable effort to derail the City’s efforts. However, the City found a local cooperative, TriCounty Telephone (TCT), willing to offer triple-play services on the City’s network.

Financing the deal took more time than expected because the City was unwilling to commit public money directly or even as a backstop if the network fell behind on debt payments. While the City worked on the financing, cable incumbent Bresnan and telephone incumbent Qwest tried to convince the state legislature to abolish Powell’s authority in this arena. The legislature did create new obstacles for cities building such systems but Powell was grandfathered in.

In late 2007, the City agreed to an arrangement where TCT would exclusively lease the network and make up shortfalls in debt payments if required for a period of six years. After that period, the network would be open to other service providers as well and it would be the City’s responsibility to cover any shortfalls if needed. If the City chose not to appropriate in that situation, the investors could take the network. Estimates suggested a 33% take rate would allow the network to break even by the fifth year but most expected a higher take rate.

In early 2008, Powell completed the $6.5 million bond financing. As is more common in small builds, they immediately connected a line to the home rather than waiting for the subscriber to sign up. They trenched a fiber to the side of every house regardless of whether they were taking service, putting the fiber in a box on the side of the house. If the occupant signs up, a crew only has to install electronics rather than bringing a line down from the pole. This approach increases the capital cost slightly but can significantly decrease operating expenses as residents subscribe.

TCT began offering services in early 2009, creating a price war. Bresnan and Qwest significantly lowered their promotional prices in response to the network, ensuring that even residents who do not subscribe to the new city owned network will benefit from it. Bresnan has lowered its prices considerably, offering deals to Powell customers that are unavailable in nearby communities without competition. Incumbent providers often engage in what appears to be predatory pricing – a matter we discuss below in Obstacles to Community Ownership.

Powellink, built with the slogan “Our Fiber, Our Future,” offers much faster speeds than Qwest and Bresnan, both of whom are limited to asymmetrical connections that leave upload speeds at 1Mbps or less. TCT, whose network can offer 100Mbps symmetrical connections, does not fool around with promotional rates and long-term contracts.

Responding to critics of the City’s investment, Powell’s mayor noted that small communities like Powell always have to wait for companies to get around to them:

"It was 10 years ago when people at Qwest said they would be bringing us a fiber-to-the-home system," he said. "I found a letter from 1997 saying, 'It's coming soon.' Obviously, 'soon' for us is different for them."

The network has attracted jobs that require these high speeds – teaching English to students around the world using tele-presence applications. The company intends to hire 100 people, a major economic development win in a community of 5,000.

Powell’s City Administrator, Zane Logan, argues that building a modern network offers much more bang for the buck on the matter of economic development. Some communities work out tax breaks and other advantages for a company that announces it will create a certain number of jobs. In Powell, they instead focused on providing great infrastructure. They started by upgrading the public power system to ensure the highest reliability. Then they built an impressive network, offering speeds rarely available in even the densest urban areas of the U.S. and at prices below existing packages. Now, as Powell expands, developers will pay the majority of costs to expand the network in newly built neighborhoods in the same way they connect sewer systems.

There are many places to find information about AT&T's war on WiscNet, a great credit to those who recognize the importance of WiscNet to schools, libraries, and local governments around the state. The best article on the subject may be from Wisconsin Tech News (WTN), with "UW faces return of $37M for broadband expansion in 11th hour bill." This post builds on that as a primer for those interested in the controversy.

Update: Read a Fact Check Memo [pdf] from the University of Wisconsin Extension Service with responses to false allegations from AT&T and its allies.

Synopsis

AT&T and its allies have long made false claims against WiscNet, setting the stage for their lobbyists to push this legislation to kill it. AT&T and some other incumbents want to provide the services WiscNet provides in order to boost their profits. WiscNet not only offers superior services, it offers services the private providers will not provide (including specialized education services). For instance, from the WTN article:

One of features that differentiates WiscNet from a private broadband provider is allowing for “bursting,” so that during isolated periods when researchers send huge data sets, they greatly exceed the average data cap. UW-Madison currently uses seven gigabits on average, and would have to procure 14 gigabits under the new legislation, even though most of the extra seven gigabits would seldom be in use, Meachen [UW CIO] said.

“We'd be paying for the fact that researchers have to send these huge data sets, and not have it take hours and hours to get to where it's going,” Meachen said. “You can't afford to pay for that extra 7 gigabits from the private sector because it's too costly. They increase your charges based on that.”

A private network would not have the necessary capacity for scientists on the UW-Madison campus, who are some of the leading researchers on next generation Internet. A previous recommendation to combine BadgerNet and WiscNet was deemed infeasible, as AT&T would own the network and would not be able to provide sufficient bandwidth at an affordable cost, Meachen said.

WiscNet is a buying cooperative, offering far lower prices to schools, libraries, and local governments than they would have to pay the private sector for similar services. More importantly, its costs increase much more slowly over time than similar connections from the private sector as community anchor institutions need faster and faster connections.

Killing WiscNet means more tax dollars going to AT&T rather than keeping cops on the streets, teachers in schools, and libraries open longer hours. These public institutions are all struggling to make ends meet and an end to WiscNet means radically increasing telecom budgets.

While being very reliable BadgerNet is NOT affordable to many community institutions. For example, a 100Mbps service is $6,000 a month and a 1,000Mbps service is $49,500 a month. … The UW grant clearly shows a return on investment of 3.5 – 4.5 years. After that an institution will be able to get 1,000Mbps service for about $10,000 annually vs. $594,000 annually, which is the current BadgerNet rate.

Background

BadgerNet is a physical network comprised of leased lines connecting libraries, schools, local governments, and other public institutions throughout Wisconsin. Badgernet is almost entirely owned by AT&T and its costs are heavily subsidized via state and federal programs. WiscNet provides services over those connections, including Internet access. WiscNet has been providing Internet service since 1991 whereas BadgerNet was built in the mid 90's. For more, this pdf offers background.

My colleagues and I brought the Internet to the UW System and to other higher education institutions in Wisconsin, and to public schools and libraries throughout the state through a non-profit association called WiscNet. The budget proposal that would prohibit future work of this kind is a travesty. Research depends on using the very latest communications tools and capacity to be competitive, and these tools are not provided in Wisconsin by telecommunications companies. The UW-Madison must buy its access to them wholesale, and supplement them substantially with its own networking expertise. This expertise and capacity is then made available in the rest of the state through WiscNet [WiscNet contracts for this expertise, it is not provided for free by UW]. WiscNet also provides a collaborative environment in which like public institutions can pool their expertise to maintain services at a high level in this rapidly developing technology. Neither advanced networking nor such collaboration can be provided at retail by Wisconsin's private sector, despite their protestations to the contrary.

Lying and Lobbying

AT&T and its Republicans make the same bogus claims we see across the country in situations like this. They claim that despite being one of the largest corporations in America, they are the underdog and need special legislation to protect their interests. From the WTN article:

Republican lawmakers and the Wisconsin Telecommunications Association say the university should not be in the business of providing telecommunications services, and are in favor of shifting reliance back to BadgerNet, a state-run network that consists of private telephone companies, small and large, including AT&T, that band together to offer services to the education community in the state.

Bill Esbeck, executive director of the Wisconsin Telecommunications Association, says existing state law already prohibits the UW system from offering, reselling or providing telecommunications services that are available from private telecom carriers.

“WiscNet as an entity can continue to operate, we just think it should operate without a taxpayer subsidy,” Esbeck said. “We firmly believe some of the other telecom ventures at the UW are contrary to the existing state statute.”

Of course, if UW is really violating the statute, AT&T can take it to court. Why don't they? Massive incumbents sue competitors all the time for the flimsiest of reasons just to harass and tie them up in court. They don't go to court because WiscNet is not violating the statute and has welcomed a state audit to put an end to these allegations.

AT&T knows it best course is not via the courts, where it will lose but rather in the Legislature, where it vast lobbying power gives it the most advantage.

The charges that WiscNet is somehow competing unfairly with public tax dollars is absurd on its face. Though WiscNet does not receive the subsidy claimed by AT&T and its allies, even if it did, that subsidy is nothing compared to the subsidies provided to AT&T and its allies from state and federal programs to expand broadband access.

Impact

Again, from the WTN article:

Meachen says the telecom provision means high stakes for both the State of Wisconsin and for the university. The provision calls for the UW System to completely disassociate with WiscNet by July 2012.

“We created WiscNet, which is now a member owned and operated cooperative with an independent board,” he said. “So, we are forbidden to work with them, and they are our network provider, so we would have to start over from scratch and completely recreate our network. I can't even estimate the cost of that.”

If the UW System used BadgerNet to meet its current bandwidth requirements, it would pay an estimated $8 million a year, Meachen said. It currently costs the UW System $2 million a year for WiscNet, which is provisioned so that the costs to the customers do not increase with increasing bandwidth. Instead, the fee is based on the size and type of institution.

Using what he calls a conservative estimate, Meachen says the UW System would spend $27 million for BadgerNet by 2016, based on an annual growth rate of 35 percent.

“I, for one, would not want to stand before the taxpayers having just spent $27 million of their money when I knew I could have done the same thing for $2 million,” Meachen said.

The language is so broad, it would preclude participation in essential networks for scientific collaboration, like Internet2. AT&T and its allies claim this is a misinterpretation, but the language is pretty clear, as we noted previously.

The Madison Metropolitan School District has used WiscNet as a provider for all of its network services, including Internet, email and online teaching tools, for 17 years. For the last 12 years, the district has been required to bid out to private organizations to see what service was cheaper, and it said WiscNet has always been a better value.

"If we were to change to an alternative Internet service provider right now, my estimate is the immediate cost to the district would be approximately 70 percent higher right now, and that doesn't count the services that WiscNet brings to the table for free," said Mark Evans, director of technology services at the Madison Metropolitan School District.

View the video accompanying that story:

Wisconsin Returns More Stimulus Money

Despite ranking 43'rd in broadband among 50 states on the National Broadband Map, the present Wisconsin state government seems determined to return all federal assistance in expanding broadband access.

This language also requires Wisconsin to return tens of millions of dollars in broadband stimulus awards to a public-private partnership. Returning these funds would be a tremendous blow to Packerland Broadband / CCI Systems, the private sector partner that has already invested millions into the project.

Yes, you read that correctly. AT&T and some other incumbents had their opportunity to work with the partners in this stimulus project and chose not to. Now they are trying to kill the project so they will remain the only remaining option to provide connections to these community anchors… charging far more for far less than the stimulus project would provide.

In order to qualify for the stimulus, those involved documented that the connections they need were not available from incumbents. It is not that incumbents cannot provide services like dark fiber, they just prefer not to because the profit margin is smaller than on the services they want to provide.

If AT&T and allies are successful, they will be proverbial dog in the manger: they will not provide the needed connections on reasonable terms and will use their lobbying clout in the capital to ensure no one else can either.

What to do

If AT&T is really so concerned about WiscNet violating the law, it should pursue the matter in court or in the normal legislative process rather than attaching this language in the 11th hour of the budget process. Just because AT&T has the clout to pass its false talking points off as truth should not make the Legislature agree to kill off an essential tool for schools, libraries, and local governments without a proper hearing.

If you are in Wisconsin, contact your elected officials and respectfully urge them to remove sections 23-26 of the UW System Budget Bill. Explain that WiscNet is essential for schools and libraries across the state and if they Legislature has concerned with how it operates, they should have proper hearings and an audit to establish some facts. Find your legislators using this tool.

Pass resolutions, as some have already started from relevant organizations. Resolutions show support and are a good organizing tool.

If you are not in Wisconsin, alert those who are and encourage them to act immediately. This could be decided as early as Tuesday

On June 1, the Information Technology and Innovation Foundation held an oxford-style debate over the proposition: "Governments should neither subsidize nor operate broadband networks to compete with commercial ones."

Jim Baller and I spoke against the proposition while Rob Atkinson and Jeff Eisenach defended it during the 2 hour, 15 minute session. I was unable to be in DC and thus participated by the magic of modern telecommunications.

This is a long but valuable and unique discussion. We left talking points behind, actually responded to the points raised by the other side, and presented both sides of this debate in a reasonable manner. In short, this is exactly the kind of discussion we would elected officials to consider before legislating on the matter. But it very rarely happens -- nothing even remotely close to it occured in North Carolina when Time Warner Cable pushed its bill through the Legislature to enact a de facto ban on muni networks in the state.

In the campaign for Mayor, Seattle Mayor McGinn frequently proposed the city getting more involved in improving broadband access. Since becoming mayor, he has accomplished little in this area, perhaps due to a City Council that is not convinced it should get involved in broadband.

Seattle Mayor Mike McGinn today laid out a proposal to encourage broadband Internet in a four-block area in Pioneer Square, allowing telecom and cable companies to lease some of the conduit that the city is now placing under First Avenue South. McGinn said it is a small, incremental step in a larger plan to bring high-speed Internet to the parts of the city that need it, tapping into some 500 miles of “dark fiber” that’s not being utilized.

Pioneer Square, with a mix of commercial and residential, currently has very poor access to the Internet:

Jeff Strain, the founder of Undead Labs, a 20-person game developer in Pioneer Square, said that fiber-optic cable would dramatically improve his company’s ability to create cutting-edge games.

“What we are able to get in Pioneer Square is about half the speed of what you’d be able to get in your home,” said Strain. “So, it is not really suitable for the sort of media rich businesses that we are trying to build down here.”

We’ve heard from Pioneer Square businesses that internet speeds there are just not what a 21st century economy needs. Jeff Strain, who founded a game development company called Undead Labs, worries that he might have to move his company from Pioneer Square if the “barely adequate” internet service isn’t improved. He needs high-speed, high capacity internet access to upload his content.

Yet another reminder that simple DSL and even cable networks do not offer businesses the connections they need to take advantage of modern technology.

More background from the Request for Proposals:

The City of Seattle, through the Department of Information Technology (DoIT), is installing conduit between South Jackson Street and Cherry Street along 1st Ave South in Seattle’s Pioneer Square District. The installation is part of an ongoing street project led by the Seattle Department of Transportation (SDOT) and the Seattle City Light Department (SCL). The City is installing the conduit to provide conduit capacity requested by King County Metro for future fiber installation to serve signal cabinets. Only part of the standard four inch installed conduit will be needed for King County Metro purposes. The City has determined that after reserving space for current and future governmental uses there will remain excess capacity in the conduit which can be leased to private parties. As further detailed in RFP Section 5, the City will install three or four inner ducts in the conduit, leaving two inner ducts available for lease to an ISP(s).

The city appears ready to select one or two ISPs (which must have more than 3 years of experience) to move forward with this project. Mayor McGinn said the City would look into offering services itself if the private sector does not step up.

The City has 500 miles of fiber-optic cable, much of which could be leased as dark fiber -- a topic McGinn suggested will be addressed in the future.

Mayor McGinn has called on the City Council to pass an ordinance that will allow the City to lease space in city-owned conduits. We have some reservations about this timid approach -- it is far from clear that leasing conduit space to a few additional providers will ensure universal, affordable, reliable, and fast access to the Internet over the long term. That said, it will almost certainly be an improvement over the status quo. But what happens when Comcast buys whatever company builds these connections?

Seattle may want to consider a stronger role -- perhaps starting to build an open services network on which independent providers would compete for customers. It would require greater investment and risk than this approach, but it offers more long term rewards. If we had to guess, the City Council is the bottleneck and will only agree to this "small policy step," in the words of Mayor McGinn.

McGinn also noted that policy conversations in Beacon Hill, a neighborhood with very poor access to the Internet, almost always start with that topic. Comcast and Qwest are not meeting Seattle's needs. The question is whether the City Council will continue to prevent the community from solving its own problems with smarter investments.

We have long watched massive cable/phone companies flood public meetings (both honestly and surreptitiously) with their employees to give the perception of widespread opposition to a publicly owned network. So while this is nothing new, the practice must be highlighted as something community networks should be aware of -- much like the rampant abuse of the commenting system in the Salisbury Post, where any story that mentions the community fiber network Fibrant is slammed by a few people who post under many different identities to give the impression of widespread disapproval.

MI-Connection has been plagued by problems since buying a system that was in considerably worse shape than expected, thus requiring more capital to rehab and upgrade it. An additional problem has been the image damage done by relentless critics (noted last week):

Venzon [Chairman of Board for MI-Connection] said he’s frustrated because the publicly owned company still fights an image problem.

“With the improvements we made to the system, I thought that people would be lined up out the door,” Venzon said. “I thought they’d see this as ours, this is us, and it just bugs me that we get such poor PR out there. We have not won that battle.

MI-Connection board chair John Venzon posted the information in a comment on this website Friday. He said Mr. Stevens “has been active in using our publicly available information to turn our potential customers against us and to stir up fear, uncertainty and doubt about MI-Connection while hiding his motives. He does not live in our town or service area, so he does not ‘have a dog in the fight’ unless you consider who signs his paycheck. Could I attend competitors’ regular board meetings to see what they are doing?” Mr. Venzon asked in the comment.

Mr. Venzon also noted that Mr. Stevens has used the state’s open records law, or Freedom of Information Act, to obtain copies of “every communication between the towns, the board and management. So Time Warner does in fact sit in our meetings.”

Under North Carolina Law, those records are open, and the towns have known since they bought the system in 2007 that they had to operate under public scrutiny in a way their private competitors did not. Mr. Venzon acknowledged that, but said he’s unhappy about having a Time Warner employee following the company so closely. “In corporate America, this would constitute espionage. In our situation, it is free and legal. I find it deplorable,” he wrote.

…

Does it matter that Mr. Stevens is a Time Warner Cable employee? As editor of DavidsonNews.net, it concerns me that Mr. Stevens hasn’t acknowledged his employment when we’ve asked, or when he has commented regularly on this site about MI-Connection.

Indeed, Stevens’ efforts to hide his employer’s identity and his subsequent decision to bring his blog down after the cat was let out of the bag suggests there is nothing for Stevens or Time Warner Cable to be proud of in their relentless, often sneaky efforts to bring community-owned competition to its knees. When it comes to protecting duopoly profits of local cable and phone companies in North Carolina, it’s total war on all fronts.

Time Warner Cable may claim that they have no say in what employees do in their spare time, but they keep very close tabs on these networks and absolutely knew that he was leading a fight against another community's network while lying about his motives and employment. TWC regularly labelled MI-Connection a "failure" in its efforts to pass a bill that would preempt local authority to invest in networks that could compete with TWC services.

This entire fiasco serves as a reminder of the massive disadvantages communities have in building their own networks. Companies like Time Warner Cable, which measure their revenue in the tens of billions, have effectively unlimited resources to attack communities who build their own networks. Big companies attack communities in the courts, legislatures, and the media -- while communities have little power to respond in any of those venues (communities don't have the funds to fight in the Legislature or the media and struggle to justify expensive, prolonged court fights). This is the reality in every state.

And in places like North Carolina, it could get a lot worse if the Governor allows h 129 to become law. It is on her desk now and whether she signs it or lets it pass by doing nothing, big companies like Time Warner Cable will have even more advantages while communities will effectively be barred from building their own networks.

This is the first in a series of posts by Rita Stull -- her bio is available here. The short version is that Rita has a unique perspective shaped by decades of experience in this space. Her first post introduces readers to the often misunderstood concept of the Right-of-way, an asset owned by the citizens and managed mostly by local governments.

In the process of knitting a baby blanket, a whole ball of yarn became tangled into this mess. . . .

. . . reminding me of the time, in the early eighties, when I was the second cable administrator appointed in the U.S., and found myself peering into a hole in the street filled with a similar looking mess—only made of copper wires, instead of yarn.

Why talk about yarn and copper wire in the same breath on a site dedicated to community broadband networks? Because it was the intersection of ‘art and cable’ that got me started in the ‘telecommunications policy’ arena, the same kind of thinking that continues today in our tangled telecom discussions: Is it content or conduit, competitive, entertainment, essential, wireless, landline, gigahertz, gigabits?

I transferred from the Recreation Department to launch the city’s cable office as an experienced government supervisor with a Masters in Theater. My employer and I thought cable TV was the ‘entertainment’ business and I had the requisite mix of experience and skills to manage one of the first franchises awarded in 1981.

Yikes. Imagine my surprise on discovering that cable was a WIRE LINE UTILITY using PUBLIC LAND, which each citizen pays TAXES to buy, upgrade and maintain! And, our three-binders-thick, cable franchise was a ‘legal contract’ containing the payment terms for use of our public rights-of-way, as well as protection of local free speech rights. I was thirty years old, a property owner who had never thought about who owned roads, sidewalks and utility corridors.

Rights-of-way are every street plus about 10 feet of land on each side. That land belongs to everyone in the community. Rights-of-way are a shared public asset—sometimes called part of our common wealth.

The reason we all own rights-of-way, over four million miles of it, is so essential services such as roads, water, gas, electric, and telephone are available, universally—another legal concept—new to me — meaning ‘used by and available to everyone’. We co-own roads and utility corridors to transport ourselves, our goods and services and now our information—essentials required for survival in a developed nation.

Local, state and federal governments manage land assets on our behalf, as follows:

75.2%: 3 million miles of rights-of-way are managed by local governments—towns, cities, counties, villages, parishes, townships.

20.5%: 820,000 miles of rights-of-way are managed by state governments.

4.3%: 172,000 miles of rights-of-way are managed by the federal government.

Important Business Notes Regarding Rights-of-Way

To be in business, phone and cable companies must locate their lines in public rights-of-way. Wireless companies must connect towers for ‘signal backhaul’ via landlines. So wireless carriers also use rights-of-way. Customers can’t buy cable, phone, mobile or any Internet services—can’t stream videos—without an Internet Service Provider (ISP) owning or buying ‘landline’ capacity.

Telecom is a natural monopoly. The first telecom occupant in the rights-of-way gains tremendous advantage, making it difficult for competitors to finance duplicate infrastructure. In the past, when the threat of competition reared its ugly head, operators used their market dominance, as the incumbent in the rights-of-way, to drastically slash prices, retain customers and force nascent competitors out of business. Once the competitor is eliminated, rates can be doubled or tripled, leaving consumers without the option of changing providers.

Arguably, rights-of-way are the most valuable land asset in the nation. Now that you know you’re the proud owner of four million miles of rights-of-way, what do you think telecom occupants pay to use it?

Do you know that:

Phone companies generally hold hundred year leases, some in perpetuity, and pay nothing to use rights-of-way. Only the old basic phone rate is regulated. Offered in a duopolist market, most revenues are generated from unregulated phone-line services. Your phone company charges whatever it wants for business and residential service packages, late fees, security deposits, etc., while paying nothing to use your rights-of-way. This reality means that we, as taxpayers, subsidize phone companies by giving them free land.

Originally, cable operators, because they were offering entertainment services, set the precedent for paying a fair price to occupy rights-of-way. In the late 70’s/early 80’s, as a result of the mostly non-exclusive, franchise competitive-bidding wars, operators agreed to pay the following to use rights-of-way:

Public, education and government (PEG) access channels and funding for facilities, equipment, video production training.

From 1980-1985, thousands of local governments monitored the private sector’s deployment of millions of miles of coaxial cable plant in public rights-of-way. In this phenomenal five-year, local, public/private, collaborative undertaking to ‘cable the country for TV’, the U.S. became a ‘wired nation’, as envisioned in Ralph Lee Smith’s seminal book of the same name.

You Did It! … Or did you?

Don’t get all excited about local governments’ successful rights-of-way management – even though it resulted in cable operators wiring the country in five short years. And don’t kid yourself that local governments can effectively leverage their valuable land-use powers in negotiations with telecom incumbents.

Time for a REALITY CHECK:

Among the wealthiest and most powerful in the country, the telecommunications industry spends tens of millions of dollars, annually, lobbying to retain free use of rights-of-way land.

Once the country was wired in the early eighties, the cable industry spent the next thirty years lobbying federal and state legislatures to void franchises and eliminate as many payments for using community-owned rights-of-way as possible.

Legal Jargon

Creatively designed telecom regulations confound legislators, confuse consumers, and distort the national discourse. Current regulatory language contorts our understanding of what telecom is and its importance in our lives. Simply stated, telecommunications means the transporting of information on connected networks of boxes (engineering shorthand for computers and switches) and wires, located on poles or under streets.

As fraught with engineering/marketing jargon as telecom laws are, none address the convergence of digital, Internet and fiber technologies — a convergence that means all information formats—voice, video and data are transported by the same myriad, interconnected wired and wireless networks.

When the industry lobbies for state laws that void in-kind services such as I-Nets, the cost can be enormous for the communities they serve. For example: Years ago, a California city, with a population of ninety-thousand, connected thirty municipal facilities, schools, colleges, universities, hospitals and libraries with its institutional network, provided as partial payment for rights-of-way use. When state franchising voided local requirements, the cable operator began billing the city $45,000 a month to use the institutional network. Over the fifteen-year life of the franchise, the operator expects to collect a whopping $8.1 million dollars from the city (thus the taxpayers), instead of paying to use the community’s rights-of-way.

Extorting Future Public Resources

Currently, the industry is lobbying states to PROHIBIT governments from building fiber-to-the-premise (FTTP) networks. Not only do telecom companies refuse to universally upgrade existing wire lines and provide I-Nets, they now want to prevent communities from becoming self-reliant by building their own networks (as in North Carolina and South Carolina, for instance).

Don’t be fooled into thinking that telecom regulations benefit some larger public goal. The U.S. lags behind developed nations in broadband deployment because we are not using rights-of-way to build FTTP infrastructure. We need to ‘catch up’ to competitor nations, where residents, as well as business, buy affordable, bidirectional broadband at gigabit speeds.

Stacey Higginbotham at GigaOm has explained the entire reason Time Warner Cable and CenturyLink are trying to prohibit communities from building their own networks: North Carolina has some of the worst broadband in America! TWC and CenturyLink know how uncompetitive their services are! The story covers a new broadband map launched by bandwidth.com.

Look at these numbers!!

North Carolina has SEVEN of the worst 10 places to get broadband in the US. And these are the places in North Carolina that actually have broadband! Imagine how bad it is in the rural areas. Stunning to see the North Carolina Legislators conspiring to limit the ability of communities to invest in themselves when the private sector has no interest in next-generation networks, choosing instead to reap profits off of systems that barely meet the FCC's definition of broadband.

With such terribly uncompetitive services, of course Time Warner Cable and CenturyLink have run to the Legislature to ban the community networks that have stepped in to prevent lazy incumbents from killing the future of entire communities in the digital age. As we have been detailing (most recently here), the public is overwhelmingly opposed to Raleigh telling communities they cannot build the networks TWC and CenturyLink will not.

We previously charted the superiority of the community fiber networks in North Carolina, but this chart shows just how much the existing cable and DSL companies have left North Carolina communities behind.

Random Quote

While critics charge that municipalities "crowd out" private investment, the reality in Florida shows that where municipalities invest in broadband, there are more private providers of broadband services. Municipalities frequently sell broadband services to private communications firms, and the result is a more competitive and symbiotic environment that benefits both consumers and the private sector.